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Foreign investors are pouring into the stock and money market and helping push up foreign investment inflows into the country.
But for the first time since the fourth quarter of 2015, foreign direct Investment inflows into the Nigerian economy surged 221.8 percent in the fourth quarter of 2017.
The National Bureau of Statistics (NBS) reported on Thursday that Foreign Direct Investment hit $378.4 million in the fourth quarter (Q4) of 2017, for the first time since the fourth quarter of 2015 when it stood at $123.2 million. However, it remains just a fraction of total investment inflows into the Nigerian economy in 2017.
“The Q4 2017 figure was a substantial increase of 221.8 percent when compared to the third quarter, and a 9.8 percent increase compared to Q4 2016,” the Bureau stated in its capital importation report.
“The growth in foreign direct investment was mainly driven by equity investments, which contributed 99.8 percent, while Other Capital Investment contributed 0.2 percent,” it said.
Total investments into the economy in the fourth quarter of 2017 was $5.4 billion, an annual growth of 247.5 percent and quarterly growth of 29.9 percent, according to the bureau.
As at the end of 2017, total investments into the Nigerian economy was $12.2 billion, an increase of $7.1 billion or about 139 percent from the figure recorded in 2016.
“The growth in Capital Importation in 2017 was mainly driven by an increase in Portfolio Investment, which went up by $5.52 billion from the previous year to reach $7.34 billion in 2017, and accounting for 60 percent of capital imported. During the reference quarter total capital imported when compared to the previous quarter increased by $1.24 billion,” the NBS said in the report.
President Buhari’s APC-led government has been struggling to fulfil a major campaign promise of creating jobs for teeming youths and therefore in quest for foreign direct investments which could help this happen, as against surging portfolio investments.
Unemployment to 19 percent in 2017, the highest in several years.
Although the Africa’s largest economy – also seen as possible investment haven for the continent- has moved up 24 places on the World Bank of ease of doing business rankings, poor infrastructure and insecurity continue to scare investors, creating a huge preference for portfolio investments.
In the report, the NBS further noted that Portfolio Investment was again, the main driver of investments in the fourth quarter of 2017, at $3.5 billion, indicating a quarter on quarter growth of 25.7 percent.
Year on year, it increased by 1,123.5 percent which is over twelve times the figure recorded in Q4 2016 at $284.2 million.
The increase in Portfolio Investment was driven by a strong growth in Money Market Instruments, which recorded $2.0billion, the first time since Q3 2013.
“Money Market Instruments contributed 63 percent to Portfolio investments. Equity which had been the main driver of Portfolio investments in previous quarters dropped by $942.9 million, from $1.93 billion in Q3 to $989.2 million in Q4 2017. On the other hand, Bonds recorded an increase of $194.1 million, from $115.4 million in Q3 to $309.5 million in Q4 of the same year.”
Other Investment accounted for 28.4 percent of total capital importation in the fourth quarter of 2017.
This category of capital importation grew 65.96 percent year on year, and by 21.2 percent when compared to the previous quarter.
The $1.52 billion recorded by Other Investment was mainly in the form of Loans, at $1.1 billion, in the fourth quarter, followed by Other Claims which recorded $425.7 million, and then Trade credits which reported $10million, having posted no inflows since Q4 2016.
Onyinye Nwachukwu, Abuja
